ECB Expected to Raise Interest Rate by 25 Basis Points Amid Rising Inflation

Financial market experts expect the European Central Bank (ECB) to raise its official interest rate by 25 basis points to 2.5% this Thursday, in response to rising inflation expectations.

The decision comes as the eurozone's inflation rate reached 3.3% in August, driven by a 14.4% increase in energy prices, up from 10.3% in July.

Carsten Brzeski, global head of macroeconomics at ING Research, views the expected decision as a 'precautionary rate hike' aimed at reinforcing the ECB's credibility and anticipating potential indirect effects of the current energy price crisis.

Some analysts, including Isabel Schnabel and Philip Lane, have expressed concerns about inflation levels and emphasized the need for a slightly restrictive monetary policy to combat negative price evolution stemming from high energy costs.